Utilities customers brought a class action petition for declaratory judgment and damages against city-parish consolidated government and Lafayette Utilities System (LUS), challenging the constitutionality of annual transfers of utility’s revenues to the government known as in-lieu-of-tax (ILOT) payments.
The District Court granted summary judgment in favor of defendants dismissing customer’s claims. Customers appealed.
The Court of Appeal held that:
- LUS was a revenue-producing public utility that was exempt from ad valorem taxes, and
- ILOT payments were not de facto ad valorem taxes.
The Lafayette Utilities System (LUS) was a revenue-producing public utility that was exempt from ad valorem taxes as contemplated by the state constitution, because it operated to provide a public service.
In-lieu-of-tax (ILOT) payments made by Lafayette Utilities System (LUS) to city-parish consolidated government were not de facto ad valorem taxes, even though the ILOT transfers were referred to in bond ordinances as payments-in-lieu-of tax, and/or because they were placed into the City General Fund along with other tax revenue; payments were a made from revenue generated by the utility, and payments were in no way related to the value of any property.